Photo Credit: Gerd Altmann from Pixabay

The US-based IT consulting market is estimated to grow 2% to reach $525 billion in 2021. Despite the tumultuous market conditions, ThoughtWorks (Nasdaq: TWKS) recently had a stellar IPO performance. The IT consulting firm has been expanding its market presence through acquisitions and partnerships.

ThoughtWorks’s Offerings

Founded in 1993 by Roy Singham, ThoughtWorks is a Chicago-based global technology consultancy that combines strategy, design, and software engineering, allowing enterprises and technology disruptors to thrive as modern digital businesses. It is a digital native service provider that leverages its large experience to improve its clients’ ability to respond to change, utilize data assets to unlock new sources of value, create resilient technology platforms that move with business strategies, and rapidly design, deliver, and evolve exceptional digital products and experiences at scale.

Since its inception, ThoughtWorks has been a pioneer in IT trends, such as agile software development, continuous integration, continuous delivery, microservices, evolutionary architecture, and data mesh. It was among the first to develop Agile for complex software projects. In 2001, it developed CruiseControl, a continuous integration open-source tool. In 2004, it developed Selenium, which is known for test automation of web applications.

Recently, ThoughtWorks announced its partnership with Xapo. The partnership will allow Xapo to become a globally accessible bank, providing an international USD bank account with a regulated access to Bitcoin. Xapo uses ThoughtWorks to mature its offering from wallet to a fully digital banking service that offers debit cards, deposit protection, interest on balances and more. ThoughtWorks will engage with Xapo across product, technology, and delivery to strengthen Xapo’s technology architecture, enable rapid delivery of value to customers, and streamline operations.

Analysis of ThoughtWorks’ Acquisitions

ThoughtWorks has a slew of players that compete in the IT Consulting market. Vendors range from tech leaders like Publicis Sapient and Mindtree to niche players like Perficient and Micro Focus. By acquiring some of the smaller players in the industry, ThoughtWorks hopes to grow its market share.

Earlier this year, it announced the acquisition of Finnish consulting service Fourkind for an undisclosed sum. Fourkind was set up in 2017 and employs almost 40 data scientists, machine learning experts, designers, engineers, and strategists. Its consultancy service caters to more than 80 customers across 11 countries.

Earlier in the year, ThoughtWorks had acquired another private player Gemini Solutions for an undisclosed sum. Silicon Valley-based Gemini Solutions was founded in 2005 and delivers software and product development services. It has over 170 employees, including software engineers and operations staff based in Romania. The acquisitions will help ThoughtWorks expand its presence in the European markets.

ThoughtWorks’s Financials

Its revenue in 2020 grew 4% to $803.4 million from $772.2 million in 2019. Net income grew from $28.4 million in 2019 to $79.3 million in 2020. For the six months ended June 30 2021, its revenues grew 24.4% to $498.1 million and net income fell from $37.8 million a year ago to $36.7 million.

For the third quarter, ThoughtWorks’ revenues grew 42% to $285.1 million and loss per share was $0.10.

For the fourth quarter, ThoughtWorks forecast revenues of $285-$287 million and EPS of $0.08-$0.09. For the fiscal year, it forecast revenues of $1.068-$1.07 billion and an EPS of $0.45-$0.46.

ThoughtWorks went public in September this year. Before going public, it had raised $748 million in two rounds of funding from investors including Siemens, Fidelity Management and Research Company, Mubadala, GIC, Cowen Group, and Schroder Ventures. The most recent round was held in January 2021 for $720 million at a valuation of $4.6 billion. It raised another $774 million through its IPO by selling stock at $21 at a valuation of $6.4 billion. It is currently trading at $25.43 with a market capitalization of $7.5 billion.